Ross Stores Inc.
(
ROST
), one of the largest off-price apparel and home fashion chain
retailers in the U.S., came up with stronger-than-expected sales
and same-store sales numbers for the four weeks ended July 28,
2012.
Driven by strong consumer demand for the company's wide array of
brands, Ross Stores' comparable store sales for July increased 7%,
flat with the prior-year period. Consequently, the company's total
sales for the four-week period surged 12% to $709 million compared
with $635 million in the year-ago period.
Further, Ross Stores reported second quarter 2012 comparable
store sales gain of 8% versus a 4% increase registered in the
year-ago quarter. Net sales for the quarter rose 12% to $2,341
million from $2,089 million in the year-ago quarter.
Robust sales in the quarter mainly mirror the company's
relentless focus on offering exciting collection in its name-brand
fashion for the family and home, which appeals to its
value-oriented customers.
On the back of better-than-expected sales results as well as
robust gross margins in July, management raised its second quarter
earnings per share forecast to range between 80 cents and 81 cents,
from the prior guidance of 77 cents to 78 cents. The current Zacks
Consensus Estimate for second quarter 2012 stands at 81 cents per
share.
Ross Stores is scheduled to release its fiscal second quarter
2012 financial results on August 16, 2012.
Peer Performance
One of Ross Store's competitors,
Gap Inc.
(
GPS
), registered a 10% rise in its July 2012 comparable store sales.
Meanwhile, another competitor,
Nordstrom Inc.
(
JWN
), reported positive same-store sales of 0.9% for the month of July
2012.
Our Recommendation
Ross Stores and its subsidiaries operate two chains of off-price
retail apparel and home accessories stores in the U.S. These stores
offer branded apparel, shoes, and accessories for the entire
family, as well as gift items, linens, and other home-related
merchandise.
The company also offers small furniture and furniture accents,
educational toys and games, luggage, gourmet food and cookware,
watches, sporting goods and fine jewelry, which provide it with a
competitive edge over its rivals.
Ross Stores has implemented a micro-merchandising tool, through
which the company expects to enhance its total sales and
profitability by targeting expansion in its existing markets.
Moreover, Ross remains focused on new store growth, share buybacks
and attractive dividend payouts even as many other retailers are
implementing dramatic cutbacks, and has the financial strength to
continue its course and build shareholders' value.
Ross' shares maintain a Zacks #2 Rank, which translates into a
short-term Buy rating. We have a long-term Neutral recommendation
on the stock.
GAP INC (GPS): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
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